France

Member Organizations

Member Organization Associate

  Compagnie Nationale des Commissaires aux Comptes
  Conseil Supérieur de l'Ordre des Experts-Comptables

Legal and Regulatory Environment

  • Overview of Statuatory Framework for Accounting and Auditing

    As a member of the European Union (EU), France is subject to the accounting, auditing and financial reporting requirements established in EU Regulations and Directives as transposed into national laws and regulations.

    The Commercial Code of 1966 (as amended) sets basic accounting functions in all business entities and requires companies to maintain accounting books and prepare annual financial statements. French accounting standards are developed and adopted by the Accounting Standards Authority (ANC), created by the Ordinance No. 2009-79 and Decree No. 2010-56, which is the legal body responsible for accounting standard-setting.

    In accordance with the EU statutory framework, Regulation EC 1606/2002, as transposed into national legislation by the ANC, listed entities are required to apply EU-endorsed IFRS Standards for consolidated financial statements. In addition, all other companies are permitted to apply IFRS for their consolidated financial statements. However, no entity is allowed to apply IFRS for the preparation of their individual financial statements and instead must use French accounting standards (French GAAP). The ANC has concluded that there is no demand for the IFRS for SMEs in France where French GAAP is considered fit for purpose.

    The auditing requirements in France are transposed by the Audit Directive and Regulation (EU) No 537/2014. Auditing standards are prepared and drafted by a joint commission of the Compagnie nationale des commissaires aux comptes (CNCC) and the High Council for Statutory Audits (H3C), the audit oversight authority. The H3C will subsequently adopt the drafts as standards of professional practice, after receiving an opinion on the standards from the CNCC. The Ministry of Justice is ultimately responsible for endorsing the standards at the end of this process. The standards are based on the ISA; however, it is unclear the version used as reference.

    A mandatory audit is required for all public limited companies and simplified joint stock companies which are part of a group or which exceed two of the three following thresholds: (a) EUR 1,000,000 of total assets; (b) EUR 2,000,000 of turnover or resources; and/or (c) 20 employees. In addition, other undertakings including limited liability companies which exceed two of the three following three criteria: (a) EUR 1,550,000 of total assets; (b) EUR 3,100,000 of turnover or resources; (c) 50 employees.

  • Regulation of Accountancy Profession

    In France, the accountancy profession is regulated at the state level and at the professional level. The Financial Security Law, written into the Commercial Code, recognizes the High Council for Statutory Audits (H3C), under the supervision of the Ministry of Justice, as an independent, non-governmental entity responsible for overseeing the audit profession. In addition the Commercial Code, recognizes two segments of the profession “Commissaire aux comptes” (statutory auditors) and “Expert-comptable” (chartered accountants)—which are both regulated at the professional level by the Compagnie nationale des commissaires aux comptes (CNCC) and the Conseil Supérieur de l’Ordre des Experts-Comptables (CSOEC), respectively.

    In France, the universities, the Ministries of Higher Education, Justice and Economy, Finance and Budget have a role in implementing initial professional development (IPD) requirements for professional accountants, which are established in the Commercial Code for the “Commissaires aux comptes” and in the Decree 2012-432 of 2012 for the “Experts-comptables.” To be eligible to practice as a statutory auditor or chartered accountant, individuals must: have a university degree, have work experience of at least three years in an accounting/auditing firm, pass a final assessment, and obtain the French higher accountancy degree: “Diplôme d’Expertise Comptable” (DEC). The DEC gives access to both professions; however, auditors must obtain their practical experience in audit. In addition, there is a second pathway to become a statutory auditor through the professional certificate “Certificat d’aptitude aux fonctions de commissaire aux comptes” (CAFCAC) which permits someone without a specific university education in accounting—candidates are usually engineers—the opportunity to pass a preparatory certificate before beginning three years of practical training. Subsequently, candidates must be registered with the CNCC or CSOEC in order to practice.

    The H3C, as the oversight authority for the audit profession “Commissaires aux comptes,” has the following responsibilities: (i) the approval and registration of statutory auditors and audit firms; (ii) the adoption of standards on audit, professional ethics, and internal control, as well as professional best practices; (iii) establishing a quality assurance (QA) system; (iv) developing an investigative and disciplinary system; and (v) supervision of continuing professional development (CPD) of statutory auditors. The Ministry of Justice is ultimately responsible for endorsing standards on audit, as well as professional ethics for statutory auditors.

    As part of its mandate, the H3C has delegated the following activities to the CNCC: (i) registration of statutory auditors and audit firms, except for non-EU statutory auditors and audit firms; (ii) QA inspections of non-public interest entities (non-PIEs); and (iii) monitoring of CPD for statutory auditors.

    Statutory auditors are also subject to regulation of the CNCC, created by the decree of August 12, 1969 (as amended May 27, 2005) and codified in the Commercial Code in August 2007, as an independent institute under the auspices and supervision of the Ministry of Justice. Statutory auditors who are authorized to practice in France, whether they are individuals or legal entities, are required to belong to the CNCC. In addition, to the responsibilities delegated by the H3C, the CNCC, along with its 33 regional arms—Compagnies régionales des commissaires aux comptes—carries out the following regulatory activities: (i) providing input into the accountancy curricula and IPD requirements for statutory auditors; (ii) giving its opinion when required by the Ministry of Justice on draft laws and decrees; and (iii) submitting to the public authorities all useful proposals relating to the professional organization and the audit assignment.

    Meanwhile, chartered accountants in France are regulated by Ordinance No. 45-2138 of 1945, which created the CSOEC, as an independent organization, under the purview of the Ministry of Economy, Finance and Budget. Individuals and legal entities are required to be members of CSOEC to offer accountancy services other than statutory audit. In accordance with the law, the CSOEC responsibilities include the following: (i) maintaining the registry of chartered accountants and accounting firms; (ii) establishing CPD and professional conduct requirements; (iii) establishing and operating a quality control system; (iv) preparing and drafting professional conduct standards; (v) drafting auditing standards for contractual audits and reviews of historical financial information, and other assurance and related services engagements; (vi) providing input into the accountancy curricula and IPD requirements for chartered accountants; and (vii) representing, promoting, defending, and developing the profession of chartered accountant, both in France and abroad.In addition, the Commercial Code authorizes the Regional Chambers of Discipline, which are legally independent from the CNCC and the CSOEC, to investigate and discipline statutory auditors and chartered accountants. The Regional Disciplinary Chambers are fully integrated into the French judicial system. The Regional Disciplinary Chambers undertake discipline and investigation for statutory auditors of cases relating to non-PIEs and CSOEC members. CNCC members may appeal with the H3C while both CNCC and CSOEC members may appeal decisions before the National Disciplinary Chamber. The appeal to the decisions of the National Disciplinary chamber takes place before the Supreme Court (Conseil d’Etat).

  • Audit Oversight Arrangements

    The Financial Security Law, written into the Commercial Code, recognizes the High Council for Statutory Audits (H3C), under the supervision of the Ministry of Justice, as an independent, non-governmental entity responsible for the oversight of the audit profession. The H3C is a member of the International Forum of Independent Audit Regulators.

    The H3C has the following responsibilities: (i) the approval and registration of statutory auditors and audit firms; (ii) the adoption of standards on audit, professional ethics, and internal control, as well as professional best practices; (iii) establishing a quality assurance (QA) system; (iv) developing an investigative and disciplinary system; and (v) supervision of CPD of statutory auditors. As part of its mandate, the H3C has delegated some activities to the Compagnie nationale des commissaires aux comptes (CNCC)—the professional accountancy organization for statutory auditors in France. These include: (i) registration of statutory auditors and audit firms, except for non-EU statutory auditors and audit firms; (ii) QA inspections of non-public interest entities (non-PIEs); and (iii) monitoring of CPD for statutory auditors.

    To enhance the oversight of listed entities, H3C and the securities market regulator, the Autorité des Marchés Financiers (AMF), signed a cooperation agreement in 2010 setting out the procedures for the AMF to assist in performing periodic inspections of statutory auditors appointed to companies under AMF’s supervision. The agreement also covers the arrangements for sharing information held and gathered by the authorities when carrying out their respective duties. In addition, the Commercial Code provides that the AMF can assist in the periodic inspections of statutory auditors auditing the accounts of persons under AMF’s supervision.

    Lastly, the Commercial Code authorizes the Regional Chambers of Discipline to investigate and discipline statutory auditors related to cases with non-PIEs. The Regional Disciplinary Chambers are fully integrated into the French judicial system. Statutory auditors may appeal to the H3C and before the National Disciplinary Chamber. The appeal to the decisions of the National Disciplinary chamber takes place before the Supreme Court (Conseil d’Etat).

  • Professional Accountancy Organizations

    The Compagnie Nationale des Commissaires aux Comptes (CNCC)

    The CNCC, created by the decree of August 12, 1969 (as amended May 27, 2005) and codified in the Commercial Code in August 2007, is an independent institute under the auspices and supervision of the Ministry of Justice. Statutory auditors who are authorized to practice in France, whether they are individuals or legal entities, are required to belong to the CNCC. The CNCC, along with its 33 regional arms—Compagnies régionales des commissaires aux comptes—carries out the following regulatory activities: (i) maintaining the registry of statutory auditors and audit firms, except for non-EU statutory auditors and audit firms; (ii) preparing and drafting professional standards for auditing; (iii) establishing and operating a QA systems; (iv) administering and monitoring of the CPD program; (v) providing input into the accountancy curricula and IPD requirements for statutory auditors; (vi) giving its opinion when required by the Ministry of Justice on draft laws and decrees; and (vii) submitting to the public authorities all useful proposals relating to the professional organization and the audit assignment.

    In addition to being an IFAC Member, CNCC is also a member of Accountancy Europe, the Federation Internationale des Experts-Comptables Francophone (FIDEF), and the Fédération des Experts-Comptables Mediterranéens (FCM). In addition, CNCC participates in the European “Common Content Project.”

    The Conseil Supérieur de l’Ordre des Experts-Comptables (CSOEC)

    The CSOEC is an independent organization, under the purview of the Ministry of Economy, Finance and Budget, created by Ordinance No. 45-2138 of 1945. Individuals and legal entities are required to be members of CSOEC in order to offer accountancy services other than auditing. In accordance with the law, the CSOEC responsibilities include the following: (i) maintaining the registry of chartered accountants and accounting firms; (ii) establishing CPD and professional conduct requirements; (iii) establishing and operating a quality control system; (iv) preparing and drafting professional conduct standards; (v) drafting auditing standards for contractual audits and reviews of historical financial information, and other assurance and related services engagements; (vi) providing input into the accountancy curricula and IPD requirements for chartered accountants; and (vii) representing, promoting, defending, and developing the profession of chartered accountant, both in France and abroad.

    In addition to being an IFAC Member, CSOEC is also a member of Accountancy Europe, FIDEF, and FCM. In addition, CSOEC participates in the European “Common Content Project.”.

Adoption of International Standards

  • Quality Assurance

    In France, in compliance with the Audit Directive and Regulation (EU) No 537/2014, a mandatory quality assurance (QA) review system is required for all statutory audits. The High Council for Statutory Audits (H3C) has the ultimate responsibility for quality assurance of all statutory audit firms.

    Accordingly, the H3C conducts QA reviews for all public interest entities (PIEs). PIEs include listed entities, credit institutions, insurance companies, and certain companies whose turnover exceeds a certain threshold, such as: financial holding companies, one of whose subsidiaries is a credit institution; mixed financial holding companies, one of whose subsidiaries is a PIE; insurance group companies, mutual insurance group companies, mutual grouping unions, insurance welfare groups, social protection insurance group companies. As far as non-PIEs QA reviews are concerned, the H3C has delegated the reviews to the Compagnie Nationale des Commissaires aux Comptes (CNCC). In fulfilling this responsibility, CNCC maintains a monitored peer review mechanism under the oversight of the H3C. In France, the five largest audit firms operating in the jurisdictions are inspected on an annual basis. Other PIE audit firms are inspected every three years (or six years for smaller firms), and non-PIEs audit firms are inspected every six years.

    To enhance the oversight of the securities market, the Autorité des Marchés Financiers (AMF) assists H3C in performing periodic inspections of statutory auditors appointed to companies under AMF’s supervision.

    In addition, in accordance with the Decree of March 30th, 2012 and the Order of May 3rd, 2012, the Conseil Supérieur de l’Ordre des Experts-Comptables (CSOEC) has established mechanisms to review the quality of specific engagements undertaken by its members. Chartered accountants are subject to reviews approximately once every eight years. The CSOEC indicates in its SMO Action Plan that it has adopted the ISQC 1 for its members, with slight modifications.

    Based on available information on the QA review systems being carried out by the H3C, CNCC, and CSOEC, it seems that all systems are aligned with SMO 1 best practices; however, ISQC 1 and ISA 220, which are key components of the SMO 1 best practices, are not adopted.

    Current Status: Partially Adopted

  • International Education Standards

    In France, the universities, the Ministries of Higher Education, Justice and Economy, Finance and Budget have a role in implementing initial professional development (IPD) requirements for professional accountants, which are established in the Commercial Code for the “Commissaires aux comptes” and in the Decree 2012-432 of 2012 for the “Experts-comptables.”

    To be eligible to practice as a statutory auditor or chartered accountant, individuals must: have a university degree, have work experience of at least three years in an accounting/auditing firm, pass a final assessment, and obtain the French higher accountancy degree: “Diplôme d’Expertise Comptable” (DEC). The DEC gives access to both professions. However, auditors must obtain their practical experience in audit. In addition, there is a second pathway to become a statutory auditor through the professional certificate “Certificat d’aptitude aux fonctions de commissaire aux comptes” (CAFCAC) which permits someone without a specific university education in accounting—candidates are usually engineers—the opportunity to pass a preparatory certificate before beginning three years of practical training. Subsequently, candidates must be registered with the Compagnie Nationale des Commissaires aux Comptes (CNCC) or Conseil Supérieur de l’Ordre des Experts-Comptables (CSOEC) to practice.

    As reported by the CNCC and CSOEC, the accountancy education program incorporates the requirements of the revised IES including the learning-outcome approach to IPD requirements:

    • Incorporated in the new route of validation of acquired experience (“VAE”). The “VAE” is effective for the Bachelor and Master levels (“DCG” and “DSCG”) and will be effective at the end of 2019 for “DEC;”
    • Integrated as part of the next accounting syllabus reform (2019–2020).

    CNCC and CSOE members are required to complete 120 hours of continuing professional development (CPD) over a 3-year rolling period. For statutory auditors, the High Council for Statutory Audits (H3C) defines the general guidelines and the key areas for CPD fulfillment and ensures compliance with these requirements. The H3C has delegated CPD monitoring responsibilities to the CNCC. If statutory auditors are members of both institutes, the organizations take steps to ensure there is no duplication of CPD obligations.

    The CNCC and CSOEC report that the education requirements in place for all professional accountants meet the revised 2015 IES requirements.

    Current Status: Adopted

  • International Standards on Auditing

    National legislation in France transposes the Audit Directive and Regulation (EU) No. 537/2014. Auditing standards for statutory auditors are prepared and drafted by a joint commission of the Compagnie Nationale des Commissaires aux Comptes (CNCC) and the High Council for Statutory Audits (H3C), the audit oversight authority. The H3C subsequently adopts the drafts as standards of professional practice, after receiving an opinion on the standards from the CNCC. The Ministry of Justice is ultimately responsible for endorsing the standards at the end of this process. The standards are based on the ISA; however, it is unclear the version used as reference. The CNCC indicates that the application of ISA for statutory audits will be subject to their direct adoption at European level by the European Commission.

    The CNCC reports that it leads in the translation of ISA in collaboration with the Belgian Institut des Réviseurs d’Entreprises (IRE). The 2016–2017 Handbook has been translated into French.

    In addition, in accordance with the Ordinance No. 45-2138 of 1945, the Conseil Supérieur de l’Ordre des Experts-Comptables (CSOEC) has responsibility for drafting auditing standards for contractual audits and reviews of historical financial information, and other assurance and related services engagements, with approval from the Ministry of Economy, Finance and Budget. The CSOEC indicates that the standards for contractual audits and for other services are based on the 2009 ISA. The CSOEC continues to review recently issued ISA as part of its convergence process and is now awaiting the Ministry of Economy’s agreement to apply the 2016 ISA version.

    Current Status: Partially Adopted

  • Code of Ethics for Professional Accountants

    The Ministry of Justice (MoJ) has responsibility for adopting ethical requirements for statutory auditors. The Code of Ethics was published first published in 2005 and subsequently amended in 2008, 2010, and 2017. Before its publication, the MoJ consults the oversight authority for the audit profession, High Council for Statutory Audits (H3C) and the securities market regulator, the Autorité des Marchés Financiers (AMF). As reported by the CNCC, the Code of Ethics for statutory auditors is not based on the IESBA Code of Ethics, but its requirements are considered more stringent than the IESBA Code.

    For chartered accountants, the Conseil Supérieur de l’Ordre des Experts-Comptables (CSOEC) has responsibility for drafting ethical requirements and the Ministry of Economy, Finance and Budget has responsibility for their approval, in accordance with the Ordinance No. 45-2138 of 1945. The Code of Ethics for chartered accountants was approved and published in the Decree 2012-432 of 2012. As reported by the CSOEC, the Code of Ethics does not incorporate all the requirements of the IESBA Code of Ethics.

    The CNCC and CSOEC report that the institutes participated in the translation of the 2009 IESBA Code of Ethics in collaboration with the Belgian Institut des Réviseurs d’Entreprises (IRE), CPA Canada, and the Institute of Chartered Accountants of Cameroon (ONECCA-Cameroon).

    Current Status: Partially Adopted

  • International Public Sector Accounting Standards

    The Public Sector Accounting Standards Council (Conseil de Normalisation des Comptes Publics (CNOCP), an advisory body under the authority of the Ministry of Public Accounts, is responsible for establishing public sector accounting and reporting standards in France. The CNOCP issues prerequisite recommendations on the general accounting principles applicable to the public sector in France

    As reported by the Compagnie Nationale des Commissaires aux Comptes (CNCC) and the Conseil Supérieur de l’Ordre des Experts-Comptables (CSOEC), IPSAS have not been adopted in France and indicated that the CNOCP has concluded that it will not adopt IPSAS after an analysis developed in 2014; however, they are considered as one of the references for establishing standards. The standards are different for central government, local governments, and social security agencies but they are all accrual-based standards.

    The CNCC and CSOEC, report in its SMO Action Plan that they have assisted the CNOCP in the translation of the 2015 IPSAS Handbook.

    Current Status: Not Adopted

  • Investigation and Discipline

    In France, the Commercial Code establishes a mandatory investigative and disciplinary (I&D) system for statutory auditors. With the implementation of the EU Audit Directive 2014/56 and Audit Directive and Regulation (EU) No. 537/2014, the High Council for Statutory Audits (H3C), the audit oversight authority, is responsible for I&D processes for statutory auditors. The H3C undertakes the I&D function of cases related to public interest entities (PIEs). The H3C recruited an independent prosecutor who oversees conducting investigations together with a team of five persons.

    In addition, the Commercial Code and the Ordinance No. 45-2138 of 1945 authorize the Regional Disciplinary Chambers, which are legally independent of the Compagnie Nationale des Commissaires aux Comptes (CNCC) and the Conseil Supérieur de l’Ordre des Experts-Comptables (CSOEC), to investigate and discipline statutory auditors and chartered accountants. The Regional Disciplinary Chambers are fully integrated into the French judicial system and are composed of professional accountants together with a judge and a representative of the government. The Regional Disciplinary Chambers undertake I&D of cases relating to non-PIE matters and all CSOEC members. CNCC members may appeal with the H3C while both CNCC and CSOEC members may appeal decisions before the National Disciplinary Chamber. The appeal to the decisions of the National Disciplinary chamber takes place before the Supreme Court (Conseil d’Etat).

    Sanctions are published once they are made anonymous or can be fully consulted at the regional disciplinary chamber. The list of the possible sanctions is limited and defined by the legal framework.

    The CNCC conducted an assessment of H3C’s I&D policies and processes against the best practices of SMO 6 and identified gaps, such as a timeframe for disposal of all cases and an independent review of complaints on which there was no follow-up.

    The CSOEC reports that the Regional Chambers of Discipline processes fulfill the best practices of SMO 6.

    Current Status: Partially Adopted

  • International Financial Reporting Standards

    French accounting standards are developed and adopted by the Accounting Standards Authority (ANC), created by Ordinance No. 2009-79 and Decree No. 2010-56.

    In accordance with the EU statutory framework, Regulation EC 1606/2002, as transposed into national legislation by the ANC, listed entities are required to apply EU-endorsed IFRS Standards for consolidated financial statements. In addition, all other companies are permitted to apply IFRS for their consolidated financial statements. However, entities are not permitted to apply IFRS for the preparation of their individual financial statements. These must be prepared in accordance with French accounting standards (French GAAP).

    The ANC has concluded that there is no demand for the IFRS for SMEs in France as French GAAP is considered fit for purpose.

    Current Status: Partially Adopted

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Methodology

Methodology
Last updated: 01/2019
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